How do you calculate overtime pay in Colorado?

Calculating overtime pay in Colorado involves understanding both state-specific and federal guidelines to ensure compliance and fair compensation. Understanding the correct methods for calculating overtime helps prevent payroll errors and potential disputes and ensures adherence to legal requirements.

This article provides a comprehensive guide on how to calculate overtime pay in Colorado, addressing various scenarios, such as piece rate workers or salaried employees, and providing practical examples to help navigate these calculations effectively.

Which Overtime Laws Apply in Colorado?

In Colorado, there are two primary laws govern overtime:

• Colorado Overtime and Minimum Pay: The Colorado Overtime and Minimum Pay Standards Order (COMPS Order No. 39) outlines the requirements for minimum wage, overtime pay, and working conditions across most industries in Colorado.
• Fair Labor Standards Act (FLSA): The federal Fair Labor Standards Act (FLSA) sets minimum standards for wages and overtime, providing a baseline for employee protection.

When state and federal laws differ, the law that is more beneficial to the employee will apply. According to the FLSA:

• Non-exempt employees are entitled to overtime pay for hours worked over 40 in a workweek.
• Overtime is calculated at 1.5 times the employee’s regular pay rate.
• Overtime pay is not required for work performed on weekends, nights, or holidays unless it exceeds the 40-hour threshold.
• There are no federal limits on the maximum number of hours an employee can work a week.
• A workweek under the FLSA is defined as a continuous 168-hour period (seven consecutive days) and can start on any day of the week as determined by the employer, allowing flexibility for different employees.

Meanwhile, COMPS Order No. 39 establishes additional overtime regulations for Colorado employers and applies to nearly all industries, Under the COMP, non-exempt employees must receive overtime pay at a rate of one and one-half times their regular rate for:

• Over 40 hours in a workweek.
• 12 hours in a single day
• Hours worked beyond 12 consecutive hours, regardless of the start and end time of the workday.

How are Overtime Laws in Colorado Different from Federal laws?

While both federal and Colorado overtime laws require overtime pay at 1.5 times the regular rate for hours worked over 40 in a workweek, they differ in some aspects:

Who is Eligible for Overtime Pay in Colorado?

In Colorado, eligibility for overtime pay depends on an employee’s classification and job duties. Employees who are non-exempt under federal or state law are eligible for overtime pay. Non-exempt employees must be paid at one and a half (1.5) times their regular rate for hours worked over 40.

Check out our guide on Overtime Rights in Colorado.

To calculate overtime for hourly employees in Colorado, follow these steps:

• Determine regular hours: Identify the total number of hours worked in a workweek. The standard workweek in Colorado is 40 hours.
• Calculate regular pay: Multiply the total regular hours worked (up to 40 hours) by the employee’s hourly wage.
• Identify overtime hours: Determine the number of hours worked beyond 40 in a workweek. These hours are classified as overtime.
• Calculate overtime pay: Multiply the overtime hours by 1.5 times the employee’s hourly wage.
• Calculate total pay: Add the regular pay to the overtime pay to get the total earnings for the workweek.

To learn more, you can read our guide on Your Rights as an Hourly Employee in Colorado.

When calculating overtime for non-exempt salaried employees in Colorado, employers must:

• Determine the regular rate of pay: Divide the weekly salary by 40 to get the regular hourly rate. If an employee works 40 hours per week and is paid $1,000 weekly, then their regular rate of pay would be $25 per additional hour.
• Calculate the regular rate of pay: Multiply the regular hourly rate by 1.5 to find the overtime rate. From the example above, the overtime rate would be $37.5 per hour (25 x 1.5).
• Identify overtime hours: Determine the total number of hours worked beyond 40 in a workweek. Only these hours qualify for overtime pay. If an employee worked 50 hours, then 10 hours would be the overtime hours.
• Calculate overtime pay: Multiply the number of overtime hours by the overtime rate. For example, if the employee worked 10 overtime hours, the overtime pay would be $375 ($10 hours x $37.5).

For more details, check out our guide on Your Rights as a Salaried Employee in Colorado.

In Colorado, calculating overtime for tipped employees involves a few additional considerations. Here’s how to calculate overtime for these employees:

• Determine the tipped minimum wage: Colorado has a specific tipped minimum wage, which is lower than the regular minimum wage. For 2024, the tipped minimum wage is $11.40 per hour.
• Calculate the regular hourly rate: Add the tipped minimum wage to the average hourly tips received by the employee to get the total regular hourly rate.
• Calculate overtime rate: Multiply the regular hourly rate by 1.5 to determine the overtime rate.
• Determine the overtime hours: Determine the number of hours worked beyond 40 in a workweek.
• Calculate overtime pay: Multiply the overtime rate by the overtime hours to get the overtime pay.

Calculating overtime for piece rate employees in Colorado involves a few specific steps. Piece rate employees are paid based on the number of units they produce or tasks they complete rather than on an hourly basis. Here’s how to calculate their overtime:

• Determine the piece rate: Identify the rate at which the employee is paid per unit of work. For example, if an employee is paid $10 per piece and produces 50 pieces in a week, their total earnings for that week from piece rates would be $500.
• Calculate the regular rate of pay: To find the regular hourly rate, divide the total piece rate earnings by the total hours worked in the workweek. For instance, if the employee worked 50 hours and earned $500, the regular rate is $500 / 50 hours = $10 per hour.
• Calculate overtime rate: Multiply the regular hourly rate by 1.5 to determine the overtime rate. Using the example above, the overtime rate would be $10 x 1.5 = $15 per hour.
• Compute overtime pay: Identify the number of hours worked beyond 40 in a workweek. For example, if the employee worked 10 hours of overtime, multiply these overtime hours by the overtime rate. In this case, 10 hours x $15 per hour = $150 in overtime pay.

To calculate overtime for commission-based employees in Colorado:

• Determine the regular rate of pay: Calculate the regular hourly rate of piece rate employees by dividing their total earnings by the total hours worked. For example, if an employee earns $800 for 40 hours of work, their regular rate of pay would be $20 per hour. For commission employees, determine the regular rate of pay by adding the commission to their total earnings and dividing the total earnings by the total hours worked. For example, if an employee works 50 hours a week at a rate of $10 per hour and receives a commission of $100, the employee’s regular rate would be $12 ($50 x 10 = $500 + $100 = $600 / 50 hours = $12).
• Calculate overtime rate: Multiply the regular rate by 1.5 to determine the overtime rate. Following the example above, the piece rate employee’s overtime rate would be $30 per hour ($20 x 1.5 = $30 per hour), while the commission employee’s overtime rate would be $18 per hour ($12 x 1.5 = $18 per hour).
• Determine the overtime hours: Determine the number of hours worked beyond 40 in a workweek. These hours are classified as overtime. If an employee worked 46 hours, then the overtime hours are 6.
• Calculate overtime pay: If the piece rate employee works for 46 hours in a week, their overtime hours are 6. Given that their overtime rate is $30 per hour, then the piece rate employee’s overtime pay would be $180 (6 hours x $30). For the commissioned employee’s overtime pay, if the employee worked 50 hours, their overtime hour is 10. Given that their overtime rate is $18 per hour, then the overtime rate would be $180 (10 hours x $18).

In Colorado, the statute of limitations for claiming unpaid overtime is generally two years from the date the wage violation occurred. This period is under state wage laws and is designed to ensure that claims for unpaid wages, including overtime, are addressed within a reasonable timeframe. If the wage violation is found to be willful, meaning the employer knowingly violated the law, the statute of limitations can be extended to three years.

Employers in Colorado must keep detailed records of hours worked and wages paid to ensure compliance with overtime regulations. This includes tracking daily start and end times, breaks, and all hours worked, including overtime. Employers should also maintain records of wages paid, including both regular and overtime pay, and basic employee information such as name, address, and occupation. Records must be retained for at least three years and should align with both state and federal regulations. Accurate recordkeeping helps resolve wage disputes and ensures adherence to wage laws.